9. Federal Income Tax Matters

The Company expects to make a RIC Election when it files its U.S. federal income tax return for the taxable year that begins, August 1, 2025 ending December 31, 2025. The Company currently qualifies and intends to qualify annually for the tax treatment applicable to RICs. A RIC generally is not subject to U.S. federal income taxes on distributed income and gains so long as it meets certain source-of-income and asset diversification requirements and it distributes at least 90% of its net ordinary income and net short-term capital gains in excess of its net long-term capital losses, if any, to its stockholders. So long as the Company maintains its status as a RIC, it generally will not be subject to U.S. federal income tax on any ordinary income or capital gains that it distributes at least annually to its stockholders as distributions. Rather, any tax liability related to income earned by the Company represents obligations of the Company’s investors and will not be reflected in the financial statements of the Company. The Company intends to make sufficient distributions to maintain its RIC status each year and it does not anticipate paying any material United States federal income taxes in the future.

Depending on the level of taxable income earned in a tax year, the Company may choose to carry forward such taxable income in excess of current year distributions into the next tax year and pay a 4% excise tax on such income, as required. If the Company determines that its estimated current year taxable income will exceed its estimated distributions for the current year from such income, the Company will accrue excise tax on estimated excess taxable income as such taxable income is earned. For the year ended December 31, 2025, the Company recorded an expense of $0.1 million, for U.S. federal excise tax, which is included in tax expense in the Consolidated Statement of Operations. Differences between taxable income and net increase in net assets resulting from operations either can be temporary, meaning they will reverse in the future, or permanent. Permanent tax differences are reclassified from accumulated undistributed earnings to paid-in-capital at the end of each year and have no impact on total net assets. For the year ended December 31, 2025, the Company reclassified for book purposes amounts arising from permanent book/tax differences primarily related to non-deductible excise taxes paid, non-deductible offering costs, and various differences associated with conversion from being taxed as a partnership as follows:

For tax purposes, net realized capital losses may be carried over to offset future capital gains, if any. Funds are permitted to carry forward capital losses for an indefinite period, and such losses will retain their character as either short-term or long-term capital losses. For the fiscal year ending December 31, 2025, the Company did not defer any capital losses.

For tax purposes, the Company may elect to defer any portion of a post-October capital loss or late-year ordinary loss to the first day of the following fiscal year. As of December 31, 2025, the Company did not elect to defer any ordinary losses, short-term capital losses or long-term capital losses.

FPL Equity Holdings LLC, a wholly owned subsidiary or (the "Corporate Subsidiary"), is subject to U.S. federal and state income taxes. The taxable entity is not consolidated for income tax purposes and may generate income tax assets or liabilities that reflect the net tax effect on temporary differences between the carrying amount of the assets and liabilities for financial reporting and tax purposes and tax loss carryforwards.

The Corporate Subsidiary recorded a provision for income tax expense (benefit) for the year ending December 31, 2025. This provision for income tax expense (benefit) is comprised of the following current and deferred income tax expense (benefit):

The Corporate Subsidiary reviews the recoverability of its deferred tax assets based upon the weight of available evidence. When assessing the recoverability of its deferred tax assets, significant weight is given to the effects of potential future income, realized and unrealized gains on investments and the period over which these deferred tax assets can be realized. Currently, any ordinary losses that may be generated by the Corporate Subsidiary may be carried forward indefinitely, subject to a limitation of 80% of taxable income each year.

The Corporate Subsidiary recognizes the tax benefits of uncertain tax positions only where the position is "more likely than not" to be sustained assuming examination by tax authorities. Management has analyzed the Corporate Subsidiary's tax positions, and has concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions taken on U.S tax returns and state tax returns filed since inception of the Corporate Subsidiary. The Corporate Subsidiary is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.